Annual revenues at the software giant last year declined for the first time in its history, as demand for PCs fell, and it also trailed the market with a line-up of me-too products such as the Bing search engine and Zune MP3 player, neither or which made significant gains on competitors.

Hsiao-Wuen Hon, managing director of Microsoft Research Asia, admits the company has been slow to embrace consumer technology.

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“Looking back I can say we probably should have done more in the consumer space. When we talk about an 'enterprise user' they are actually the same person because when they go home they are consumers."

But look beyond the shiny things in the shop windows and it is clear that Microsoft maintains a powerful presence in the corporate space. And the positive reception that greeted the launch of Windows 7 last year means that gravy train won't be drying up in a hurry.

Add to this the fact that Microsoft has 800 computer scientists, sociologists, psychologists, mathematicians, physicists and engineers all beavering away in far-flung corners of the globe to solve everything from spiralling population growth to the need for a 3D mouse.

“We are aware that we are not necessarily a media darling. People don't perceive us as innovative as we actually are. Many of them use our products but don't know it,” says Hon.

Take a tour around Microsoft's virtual home in the heart of its Redmond campus and it becomes apparent the company is giving the future needs of consumers some serious consideration.

This future, painted by Microsoft, is a world of multiple sensors, where our pot plants tell us when to water them and our doorbell automatically sends photos of visitors to our mobile phone.

Inside the house the coffee table will have its own touch interface, connecting to 3D cloud applications all accessible on every surface of the home. Where surfaces are inaccessible, skin can be used as a display and input device.

Craig Mundie, chief research and strategy officer at Microsoft, says the company's labs are about much more than pushing the latest gizmo into the marketplace.

“We are thinking about what is going to happen in the next five to 10 years. One of our goals is to allow the benefit of computers to extend to all the people on the planet and, unless we achieve that, there is no way to deal with 9 billion people who want to have some productive role in society because we can't scale current models of health and education."

He says the free rein given to researchers allows the company to look beyond the next few years.

“We've spent an unreasonable amount of money in order to build prototypes of things that predict the future,” he says.

But what that future might hold is still anyone's guess. The device of the moment might be the tablet, but, says Mundie, most people will not have just one device in their lives. Instead they will move from room to room and from device to device.

“You will take some of the context [of your data] and move it around with you. Today that is way too hard.”

Underpinning much of Microsoft's research is the transition from a graphical user interface (GUI) that we use today in computers and phones to natural user interaction (NUI).

One of the first commercial products to exploit the NUI concept is Project Natal, a new gesture controlled gaming device that uses natural body movements to control the game play.

Hailed in the market as a potentially breakthrough technology, Microsoft now has the opportunity to position itself ahead of gaming rivals Sony and Nintendo. However, Natal is not due to ship until the end of the year and is yet to prove itself in the home environment.

A former Microsoft executive recently went public about his own experiences at the company to explain why it has struggled to turn scientific advantage into marketable products.

Dick Brass, a former Microsoft vice-president, believes the research arm is restricted by the more powerful corporate side protecting short-term interests by stamping out fledgling ideas before they have had time to get established. In a recent New York Times column he wrote: “Despite having one of the largest and best corporate laboratories in the world, and the luxury of not one but three chief technology officers, the company routinely manages to frustrate the efforts of its visionary thinkers.

"Not everything that has gone wrong at Microsoft is due to internecine warfare. Part of the problem is a historic preference to develop (highly profitable) software without undertaking (highly risky) hardware. This made economic sense when the company was founded in 1975, but now makes it far more difficult to create tightly integrated, beautifully designed products like an iPhone or TiVo."

However, Hon maintains that Natal and Windows 7 are living proof that Microsoft can bring the fruits of its research into the commercial sphere.

“All this comes from investment made more than five years ago. Microsoft can also move into any new area very quickly because we have this reservoir of talent. This is an important reason for Microsoft to invest so much in research and give us all this freedom.

“And when we do invent something first like the Natal kind of scenario, while we have a researcher working with the product group for the first version, we already have a researcher thinking about the second version down the road so we certainly hope we will continue to be holding that technology. I really love what Microsoft is doing,” he says.

The company has chalked up some big wins of late with its recent Windows 7 mobile operating system attracting plaudits in Barcelona last month. The Bing search engine has also been making steady gains on its competitors.

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If Natal lives up to its promise, and the company succeeds in tapping its scientific resources to solve the pressing problems of the world, then Microsoft may yet claim a place in the family home of the future.